Stamply - what we're about!

His is a blog post about what “Stamply” – or whatever we end up calling it! – is, how it works and what we envision for its future. I’m going to first ask you to open your mind a little, so I can give a little background to where my ideas come from.

I spend a lot of time thinking about credit and value systems, from finance to religion, and I think that most people assume that our credit system is much more fixed and foundational than it really is. The truth is that our real credit system, and the reason central banks can print money without backing it with a physical commodity, is relatively recent. Isaac Newton invented the first Warden of the Mint, in London, to produce coinage with cheap metals so that they didn’t have to distribute the valuable metals, which were being sent across to the Netherlands, scratched and reduced and sent back – legally, at the time – due to discrepancies between how they measured a unit – for a profit. This was syphoning off gold from the crown of England. 

The new coinage was based upon the confidence that the crown could back up the denominated value of the coin with a real commodity – which was gold. This act eventually allowed central banks to break from the gold standard in the 20^th century and back an entire currency purely on confidence in the system – which was considered madness by many sane and sober individuals at the time.

Before Isaac Newton, another example of financial engineering that helped to produce our current financial system was the tally stick – which is also gave us the expression ‘to tally up’ in ledgers, balance sheets and common parlance. The tally stick was a stick that was notched and then cut in half, directly down the middle. 

It was impossible to forge either side of the stick to fit neatly into the other side with the correct notches – at the time atleast – so a king would go around to his lords and cut out a number of notches, representing the amount of tax the lord owed him for this year, and would take this back as proof and a guarantee that he would receive the correct tax later. If the king started a war and need cash up front, he would sell his half of the tally sticks to merchants for slightly less than the tax collectable based upon the notches and with a note of when the tax was due. When the tax was due, the merchant could bring his half of the tally stick to the lord, match them together and collect his earnings. This was an early form of government debt.

A number of other forms of credit are your family name, or your membership of a religion, upholding certain sustainable or “good” values, or loyalty schemes, etc… Really, credit is just information and guarantees of deferred reward for particular activities or in exchange for an advance payment.

With new technologies come new forms of currency, and two of the biggest technological advances over the past century have been the computer and the internet… and by extension, the smartphone. This computer in our pocket has the ability to transfer credit and record debt much more efficiently than a tally stick. We can even create our own currencies, for other smartphone users to distribute between each other, based upon the fact that we can back up the currency with something as valuable later. In principle, we can all be central banks because we have powerful computers in our pockets and the cloud at our finger-tips.

For more information on this subject, watch this: http://www.thersa.org/events/video/vision-videos/the-future-of-money

So… now that I have laid some foundations, this is what Stamply is about, in a nutshell.

It’s a recession, and in retail, loyalty is the key to survival! Customers are looking for savvy ways to save money and are increasingly organising their lives around their smartphones. But to reward loyalty efficiently, SMEs need a long term record of cash custom, including identity and purchase history. Other digital loyalty schemes require complex additional software and hardware with painful setup costs. With Stamply, an SME can set up in 15 minutes with no additional hardware to start collecting customer information and increasing customer retention immediately!

This allows consumers to collect loyalty points with multiple retailers via their smartphones and for retailers increase customer retention though their own long-term secure loyalty schemes.

For businesses:

Increased customer retention

Setting up a digital relationship with customers

Long term record of custom

For consumers:
Too many stamp cards!!!
They are easy to forget, which means they often pile up on a windowsill or in a drawer at work!
They can each only carry one or two different deals or offers!
I want a greater variety of larger deals for my loyal custom!

There are many similar or identical services being built around the world. Unlike any competitor we have found, we will back the value of a stamp against the normal currency so that retail businesses can join and separate their loyalty schemes with each other as easily as you “friend” or “unfriend” someone on Facebook.

The difference:

We are going to allow retail businesses to join and separate their schemes with each other as easily as a Facebook user “friends” and “unfriends” another. The reason for this is to create a network or “viral” affect among customers of our service in order to decrease the cost of customer acquisition. When we achieve sales on particular high-streets or in particular franchises or other business groupings, we can concentrate our sales strategy on the associated businesses, which are more likely to sign up.

This means that a consumer could, in theory, collect a stamp at a barber one day, and use it in the butcher across the road the next, and vice versa. Businesses will be able to see the amount and value of stamps they are distributing and compare them to the value and number of rewards they are distributing. In theory, businesses would, on average, be distributing slightly less rewards than stamps, because there would always be un-redeemed stamps in the accounts of the consumers. And because the value of the stamps would be backed with a fixed value against the normal currency (although they would only be useful in specific businesses), if a business was distributing too many stamps in one joint scheme they could disconnect easily with only minor inconvenience to the consumer.

u    Our primary market is retail businesses with existing paper loyalty schemes – particularly those who are: actively generating activity in their social media or online marketing strategy and businesses which are part of larger groups including

i)                    franchises,

ii)                   chambers of commerce,

iii)                 high-street retail bodies or

iv)                 chains

which means established business networks.

Our secondary market extends to all retail bodies, especially independent businesses who wish to establish mutually beneficial partnerships with other independents to compete with larger bodies such as chain stores or shopping malls.

We will develop a simple free service that allows businesses to distribute points without needing an extra device behind the till, but the full paid service will require a device behind the till in order to be secure.

Loyalty & customer analytics is a key advantage that smartphone payments have over cash or credit card. 

Without the loyalty element (or some other key advantage to consumers), smartphone payments - whether they take the form of NFC or some other system - are nothing more than a gimic, despite the obvious advantages to large technology companies, in IT Telcoms and banking.

This is why Apple have recently launched their own loyalty system for merchants instead of a service like Google Wallet, which is faltering. This is also why there are many people with our level of resources, as well as well funded established businesses, tackling the problem of how to put a device in the hand of a cash customer at point of sale, in order to facilitate the migration towards smartphone payments.

The final step:

Once businesses have established a digital connection with consumers, joining their schemes with other businesses on their high-street or in their franchise, it is trivial to allow consumers to transfer their own collected stamps to each other. So if I am a mother sending my son for a hair-cut, I can give him credits accepted by the barber. Since not all of your credits are invested in many different micro-systems and are only redeemable at set locations, if one shop closes, or one franchise, or two businesses disconnect from each other, it is no big deal. You just migrate towards businesses who you deem stable. The process of redeeming/collecting credits always remains simple and as intuitive as taking money out of your pocket and all of your credits are conveniently stored in the same app on your phone.

Call me crazy – I do try to stay grounded – but that is my vision for Stamply – or whatever we call it :-)

Next week...

Stamply - Origins